27 Feb, 2018

You earn. You spend. But do you invest? If you are someone who has just started out with your career, it’s important to understand the importance of not only investing but also investing well. I know spending is so much easier than investing, but investing will only lead to long term profits that will help you in the future.

This principle applies to both personal and professional life. It’s important to properly decide on a monthly budget and draft your expenses and savings accordingly. By investing you will help your money increase by leaps and bounds.

However, if you have never invested before and feel that you are too old to invest, change your mind. I came across a true and inspiring story about a 77-year-old man who invested and made a lot of fortune for his heirs. He invested in all the right places and is an inspiration for all age groups who are yet to invest or are looking for reasons for the benefits of investing.

Benjamin Franklin, one of the most prominent fathers of American history once said, “Every penny saved is a penny earned.” I think nothing makes more sense than this especially when it comes to investing better.

Here are the 4 reasons why you should start investing:
1. Make money work for you
Investments are of extreme importance today because the world is witnessing high competition. Just earning money and spending without a future plan drafted out can be harmful to financial security and retirement plans. Investments can always help you when you wish to take a break and start a business if you are still a working professional. I have come across various businessmen and women who have affirmed the positive impact investments have added to the growth of their business.

Investments only help your money grow and are quite different from savings that almost can’t give you half of the benefit an investment can provide. And no one likes earning less when there is an avenue to earn more by investing smartly. Make money work for you and earn money that will accelerate the growth of your empire.

2. Decide on how much to invest
The first step to invest better is to decide how much percent of your income to invest. Once you have decided with the amount to invest, you can decide on where to invest the money. It’s crucial to understand and have a thorough research of the area you want to invest it. Investments can be done for short-term medium-term and long-term period.

Short term investments can be made for a period of 5 years or less while a medium-term is from between 5 to 10 years and long term investment can be made for 10 years or more. Mostly people opt for short term investments in order to save for expenses regarding education, marriage, etc. Long term investments are usually made for after retirement purposes, etc.

3. Choose what do you want to invest in
Some of the places you could invest in are mutual funds and bonds.

Investing in mutual funds can be beneficial because it is one of the easiest ways to help you increase your assets. A mutual fund is formed when the capital collected by various investors is invested in purchasing company shares, stocks, or bonds.

A Mutual fund is money pooled from various individuals who are investors and is well-regulated by the Securities Exchange and Board of India (SEBI). It is professionally managed and promises higher returns than conventional investing and also allows you to invest in small amounts. Mutual funds are classified into 3 categories namely Equity funds, Debt funds, and Balanced or Hybrid funds.

Since the fund manager is an important person who will be responsible for managing your funds, it’s crucial to consider his expertise before choosing a fund. Always review your mutual fund investments regularly.

Another good option to invest in is Bonds. They are essentially loan agreements between the issuer of the bond and the investor, in which the issuer of the bond is obligated to pay a specified amount of money at specified future dates.

When you as the investor would purchase a bond, you are “loaning” money to the issuer of the bond, who is usually raising money for some startup or project. When the bond matures, the issuer of the bond repays the invested money to the investor. In most cases, the investor will receive regular interest payments from the issuer of the bond until the bond matures.

4. Make up your mind to invest as much as you can
You might get a salary hike or a bonus which would make you want to spend more. But it is advisable to invest as much as you can so that you can reap higher benefits in the future. The more time you place your money for investment the more benefit you can avail on the maturity of the term. You will also be able to earn interest during the meantime, which is another bonus.

Don’t miss out on any opportunity and invest for a better future. Investments provide financial security and I would advise people of all age groups to invest and enjoy a wealthy life.

Do you agree? Do let us know.